PFM Board

The Performance Dimensions in Budget => When a budget is comprehensive and transparent? => Topic started by: STONE on November 27, 2011, 15:38:58 GMT

Title: Bright and Beautiful Budgets
Post by: STONE on November 27, 2011, 15:38:58 GMT

The title and sub-title of this part of the Board are a little more prosaic:

When is a budget comprehensive and transparent? - ‘The budget and the fiscal risk oversight are comprehensive, and fiscal and budget information is accessible to the public’.

The sub-title is a quote from PEFA.
http://siteresources.worldbank.org/PEFA/Resources/PMFEng-finalSZ.pdf

There’s a lot in there: budget is comprehensive; fiscal risk oversight is comprehensive; fiscal information accessible to the public; budget information accessible to the public.

One might ask:

• what does comprehensive mean for the budget and what does it mean for oversight?

• what does fiscal information have that budget information doesn’t?

• what does ‘accessible to the public’ mean in practice?

• Is ‘the public’ homogenous in terms of its interest in and preferences for presentation of such information?

Or again one might not…

The detailed requirements for comprehensiveness and transparency are set out in the PEFA Assessment tool (see link above) and it contains information that goes towards answering those questions. 

Other organisations are also interested in BBBs – notably the Open Budget Index from the International Budget Partnerhsip see
http://internationalbudget.org/what-we-do/open-budget-survey/

But let’s start with what PEFA’s PFM Performance Assessment Tool tells us.

(First I should say that I believe PEFA’s performance assessment tool is very good but also extremely demanding in terms of the skills and time required to produce.  The supporting documentation is very carefully written to ensure consistency.  It’s not a document that one can skim and there’s no Executive Summary.  The resulting Assessment Reports require very careful reading.  Conclusions from intertemporal changes in scores should not be made without reading the explanatory text.  Inter-country score comparisons should not be made.)

In its PFM High-Level Performance Indicator Set it has 6 PIs (performance indicators) dealing with comprehensiveness and transparency.

PI 5  Classification of the budget
PI 6  Comprehensiveness of information included in budget documentation
PI 7  Extent of unreported government operations
PI 8  Transparency of inter-governmental fiscal relations
PI 9  Oversight of aggregate fiscal risk from other public sector entities.
PI 10 Public access to key fiscal information

It’s worth noting that they have to be assessed in order.  So PI 10 is related to PIs9-5.

I have set up each of the PIs as a separate topic with a bit of explanation about the PI lifted from the PEFA PFM PMF (how’s that for an acronym set?) as an invitation for board members to post and debate.  I’ve put the some of the explanatory text for PI10 here as well because I want set out what I think these PIs imply in hypothetical practice (!), working from the bottom up.

PI 10 Public access to key fiscal information

“Transparency will depend on whether information on fiscal plans, positions and performance of the government is easily accessible to the general public or at least the relevant interest groups.”

“The narrative of the assessment should comment on the quality of information made available (e.g. understandable language and structure, appropriate layout, summarized for large documents) and the means used to facilitate public access (such as the press, websites, sale of major documents at no more than printing cost and notice boards for mainly locally relevant information). The extent to which the means are appropriate depends on the nature of the documentation and the characteristics of the relevant interest or user groups, such as access to different media.”

"Elements of information to which public access is essential include:

• Annual budget documentation: A complete9 set of documents can be obtained by the public through appropriate means when it is submitted to the legislature.
  In-year budget execution reports: The reports are routinely made available to the public through appropriate means within one month of their completion.
  Year-end financial statements: The statements are made available to the public through appropriate means within six months of completed audit.
  External audit reports: All reports on central government consolidated operations are made available to the public through appropriate means within six months of completed audit.
  Contract awards: Award of all contracts with value above approx. USD 100,000 equiv. are published at least quarterly through appropriate means.
  Resources available to primary service units: Information is publicized through appropriate means at least annually, or available upon request, for primary service units with national coverage in at least two sectors (such as elementary schools or primary health clinics)."

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I think this suggests that where there’s a BBB….
… a parent,

• whose child attends elementary school and has had need of primary health clinic services in the current fiscal year), and
  who has read the education and primary health care policies of the Government (which claims to have a good, open and orderly PFM system), and
  who is disappointed that the quality of the child’s elementary schooling and/or primary health care service has not met the standards suggested in the policy/ies, and
  who has been told, upon complaint, that there is, and/or there has previously been, a public expenditure or financial constraint on delivery of better service,

could assure themselves that the constraint exists and has not arisen because of

• inadequate oversight of fiscal risk from public enterprises (in, prior, and subsequent to the year for which an external audit report on central government consolidated operations was made available to the public), or
  opaque inter-government fiscal relations, or
  incomplete reporting of government operations, or
  missing elements in budget documentation, or
  incomplete budget classifications

and could reasonably conclude that the root cause of her disappointment was

• the macro-fiscal situation of the current and/or any previous year back to the year in which the year covered by the external audit report first appeared in budget documentation (‘the information base year’), and/or
  possibly related to continuing and/or earlier shortcomings in categories A, B and D of the PFM system.

Surely, the quickest way for this parent to seek assurance would be to journey to the nearest internet access point (or write to the Ministry of Finance) to access and then read the PEFA PFM Assessment Reports of each year since the information base year (accessible in the Ministry of Finance public information service and website under a search item such as “good PFM system”), and then … do their own assessment of PIs 5-10 on the basis of information ‘made available’ to them since the last Assessment Report?

I can’t help imaging a situation where if a history of A scores for the PIs was not revealed, the parent might seek to investigate further to see if the MoF had “A scores in PEFA Assessment PIs for comprehensiveness and transparency attained by 20xy – means of verification PEFA PFM Assessment Report 20xz (z > x)” somewhere in its performance measurement set. 

The MoF might be tempted to set such a measure of performance … but that would be wrong wouldn’t it?